ProMedica, Cleveland Clinic team up

Alliance looks to improve efficiency and patient care, lower costs

ProMedica and Cleveland Clinic plan to announce an alliance between the two Ohio health systems, a move that officials said will make them more efficient and improve patient care.

Toledo-based ProMedica, which operates 11 hospitals in northwest Ohio and southeast Michigan, will explore ways to work with Cleveland Clinic, known internationally for its clinical and research efforts.

The two systems have signed a memorandum of understanding regarding the affiliation, a step they were expected to publicly announce today.

The affiliation is not a merger, and the pact does not change ownership or independent control of the institutions.

Instead, it helps the two systems respond to an evolving health-care environment and growing economic pressures, said Randy Oostra, ProMedica's president and chief executive officer.

“Things have changed so dramatically, and we’re undergoing so much change that we need to do things in a much more effective and efficient manner,” he said.

The desire to align the two systems is spurred by such reasons as the cost to provide health care, industry shifts, and the Affordable Care Act. One consideration is the climbing expense to health-care providers -- costs that aren’t matched by Medicare and Medicaid reimbursements, Mr. Oostra said.

Officials said the partnership will lead to savings and better ways to meet patient needs by purchasing equipment and supplies together to get lower prices, developing and sharing standard ways to treat patients, and working on technology systems, among other combined efforts.

“We think this is a good thing for both organizations. What we are trying to do is drive efficiency and quality,” said Dr. Toby M. Cosgrove, president and chief executive officer of Cleveland Clinic. “We think that is going to be dependent upon getting some size and scale for talent and economics.”

Mr. Oostra said the alliance will help ProMedica recruit and retain physicians. Local patients also will benefit from the relationship through a streamlined referral process and a strong relationship with Cleveland physicians, he said.

Dr. Cosgrove doesn’t anticipate the affiliation will lead to a great increase in Cleveland Clinic patients. But those who do head the roughly 115 miles east for a heart transplant or another extraordinary health need will have a more “seamless” experience, he said.

A steering committee, made up of representatives from both institutions, will decide how doctors and the facilities share medical records, a ProMedica spokesman said. That committee will be assigned to working on shared operations; a governance committee will oversee the relationship and make sure it serves the best interest of both institutions, Mr. Oostra said. Positions on the committees have not yet been filled.

Paramount, a health insurance company owned by ProMedica, covers Cleveland Clinic services approved by Paramount’s medical personnel at in-network rates. For requests that were not approved, a member pays an out-of-network rate, depending on the specific plan.

Insurance coverage for Cleveland Clinic services will not change at this time, a ProMedica spokesman said.

The affiliation follows a trend in which health-care systems are increasingly focused on coordinating care over big population areas and working with each other to accomplish that, officials said.

Mr. Oostra said ProMedica has talked to a number of other systems in Ohio and surrounding states regarding partnership potential.

An affiliation with Cleveland Clinic grew out of another initiative that ProMedica joined last year with the Cleveland organization. The effort, called the Innovation Alliance, seeks to hasten the development and commercialization of medical innovations.

As the two organizations worked together in that network they shared plans and challenges, leading to the decision to team up in more ways, Mr. Oostra said.

Cleveland Clinic and ProMedica officials both said they will consider adding additional health-care systems as affiliates.

Dr. Cosgrove said ProMedica’s sound finances and management plus the large population it serves made it a good fit for an affiliation.

Stephen Staelin, chairman of ProMedica's board of trustees, said health-care industry changes require investment in systems and standardization to become more efficient.

“It makes it very difficult for hospitals to stand alone or small systems to operate in this new environment,” he said.

There’s been a lot of merger and consolidation-type activity among hospital systems as budgets tighten, said Charlie Whelan, a San Antonio, Texas, senior health-care analyst for the consulting firm Frost and Sullivan.

“They are banding together to see what kind of efficiency they can get,” he said. “It’s going to be good for everybody in the long run.”

Organizations can find ways to affiliate without getting married, he said. Instead of a merger, the two can just “date for a while or be friends.”

“They may be able to see if they can work together on low hanging fruit and easy problems to solve,” he said. “It’s hard to say where they think, long term, this is headed, but they obviously see some opportunities to work together.”

ProMedica and Cleveland Clinic officials said the affiliation will not directly result in job losses, though both Mr. Oostra and Dr. Cosgrove added that hospitals continue to look for ways to restructure or run more efficiently.